Risk In Venture Capital: For Investors (LPs) | Claudia Zeisberger
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- Опубликовано: 26 июл 2024
- Part (2) - Investing in startups is risky - 7 out of 10 will fail or will be loss-making, i.e returning less than 1x (or the money invested).
Investors should invest in VC with eyes wide open.
In an earlier article video, Prof Claudia Zeisberger argues that VC funds choose to act in a risky manner by not diversifying, but that does not make the asset class risky.
Part (1) here: • The RISK-EXPLODING Pro...
In part (1) we asked: How to de-risk VC portfolios?
The importance of low-probability, excess-return-generating investments means that proper diversification requires a portfolio of at least 500 startups. So yes, volume matters!
The golden rule for investors into the venture asset class must therefore be: Build a portfolio of 500 startups.
The full article on the topic is here:
www.institutionalinvestor.com...
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Thank you so much Prof. Claudia!
Glad it was helpful!
Thank you so much Prof Claudia!! This is very enlightening
Glad it was helpful!
This seems like a massive ‘hit or miss’ game, close to gambling. Calculated, of course. But the variances and extremes of wins and losses are extraordinary! Who bails out the VCs that constantly deploy capital to frogs or start-ups that go bust? Seems like VC firms themselves are a massive binary option.
More in class today; but indeed it is a bet on outliers. The very far end of the distribution.
Great
thanks
PE venture returns have been shown to be persistent by firm right? So how do investors assure they get into the best funds? Also, from a multi-asset portfolio perspective should one try to 'time' their vintage year?
Persistency by firm - that's traditionally correct. Nevertheless, this correlation has started to fall apart. (slowly) It is a trend to be observed. But your question is spot on: getting into the Top quartile funds is really the skill. And it is hard (if not impossible) - several top tier funds are closed for new investors. And new funds still have to earn their stripes.